No Coverage, Covered by 60% & Taxed, Short 40% – How Do I Recover?

You recover by taking financial accountability-Ownership seriously enough to have your own income protection plan. Small Business owners routinely insure their premises, employees, and equipment, but all too often they fail to protect their own income. About 90% to be exact. This culture of business needs to change like yesterday. Meaning now.

Everything you want to accomplish in life requires an investment of your time, so when you want to improve your results, you must face the fact that your supply of time is completely inelastic- and perishable. -Brian P Morgan, 12weekyear

I would also argue the same for your financial status. Not only is there a great deal of time being invested, but also a great deal of money. Being a business owner on any scale whether it be macro of micro demands that we protect our income to the max allowed. This is serious business. Just as much as we take care of others and drive the operations north, we must also do the same for ourselves. High level executives are not exempt in this matter either. As a matter of fact, they are getting the short end of the stick. Here are some things you need to now about personal income protection to keep you from experiencing a financial shortfall:

  1. The tax implications of personal income (disability) coverage are not deductible as a business expense. For a good reason, I might add. Look at the next point.
  2. Benefits from having your personal income coverage are not taxable. This is covered in (IRC Section 104). Your personal benefits are tax-free.
  3. Tax-Free dollars can go a lot farther than Salary dollars due to the pre-taxation of your local and state taxes. You might want to include FICA as well. So, you can try to save your way to cover the 40% shortfall, but how long will that last?There will still be a shortfall. Adding a personal benefit will make up that loss that is occurred.
  4. Without personal income coverage, you may be unable to pay for your mortgages, other debts, education cost of your children. I recently spoke with a 55 year old father who sent his child to UNC Chapel Hill. It is costing him $22,000 dollars a year. He is paying cash. I explained to him the importance of covering his income for next 10-15 years. In addition the fact, he was dipping into his retirement fund to do it. That is another whole set of problems right there.

There is so much more to talk about with income protection. Your earnings deserve to be insured as well as your families.

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